Make someone responsible for debt recovery
Guest blogger – Rowan Brown, Director, Recovery Partners
Debt recovery needs to be a priority in your business. If you as the owner are too busy to do this yourself then you need to make someone else responsible for it. And make sure they know they are responsible for it and it is their priority!
Regularly complete an expense audit
Guest blogger – Roxana Olivares, Director Programs, Newcastle University Sport
We all work in extremely busy and demanding industries. It is easy to get caught up in the day to day and let your business continue running the same it always has. This means regular expenses just keep on getting paid, no questions asked. Here are a couple of examples that can save you some money. Why pay for things you no longer need? These savings have contributed to a more positive bottom line and of course cash flow.
Did you know that by shaving one hour per week off your rosters can attribute to a saving of approximately $1000 per year? Make sure you are regularly checking your rosters in line with your business needs. It may help to have some targets for the different periods throughout the year. Our business is broken up into peak, off peak and shoulder periods. This is a quick reminder to check rolling rosters and reduce hours here and there when not needed.
Do you really need all your phone lines? After a recent audit we identified two phone lines we were paying for that were used for old eftpos terminals. No longer requiring these phone lines and cancelling them from our contract has meant a saving of over $1500 per year!
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Guest Blogger – Amanda Bracks – Bracks Consulting - Women in FitnessThere are many businesses that are currently not taking pro rata. They go through all the hard work of negotiating with the prospect on a sale price, the sale is accepted and then the business discounts the customer’s fee when they are actually processing the payment details. The customer never asked for this to be removed and it’s a lost opportunity of income.
Pro rata is the amount of money owed before the next debit is due. Many sales people seem to waive the pro rata, thinking the payments can simply start on the next debit. It is very important to the business to retrieve all funds owed for the purchase including the amount owed before the first debit is due.
Working out the pro rata is simple. Just divide the debit amount to get a daily amount. Eg if your services are $89 a month x 12 months and divided by 365 days = $2.93 per day. If someone had 10 days before their debit is due, they owe $29.25 to get started (plus relevant joining / admin fees). If you sell 100 units per month and your pro rata is roughly $29.25 on average – that’s $35,100 extra income per year (money your staff are giving away now for no reason).
Ensure your staff are disciplined to collect the pro rata on every unit sold, either at point of sale or to be debited out of their account on their first debit.
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Are you addicted to lump sum revenue?
Are you addicted to lump sum revenue? – Guest blogger Justin Tamsett – Active Management
By definition an addict is someone who is abnormally tolerant to and dependent on something that is psychologically or physically habit-forming. It may even be an abnormally high craving. For many health club owners and personal trainers they become addicted to cash!
Pre-paid memberships and multi-pack PT sessions are cocaine for a fitness business. You get a massive high as you watch the cash come in. And you become addicted to this cash, as your spending more often than not reflects the amount of cash you have. So to top up the bank account, you run another offer to gain more cash. The more you get the more you spend the more you need more! Sounds like a drug.
For long term sustainability in business we need cash flow and not cash injections. Grow your weekly, fortnightly or monthly direct debits with a strategic plan and you will not require injections. Remain disciplined and focused by setting daily, weekly and monthly targets to hit in regard to debit growth. If you want to improve any number in business (in this example we are talking direct debits), you need to know what that number currently is and what you want to get it to. Then every decision you make in business, ask yourself “Will they help or hinder me changing my debit number?” If it is the latter re-think the decision. And of course, when you do shift the number positively, celebrate your success, as we do with all goal setting.
Follow the 31 day Cash Flow Challenge here and on Facebook.
Pay your creditors strategically
Guest blogger Heather Stone – You’ve Been Promoted
My number one tip is never look at your cash flow position as “bad”. Instead view it as a great position to be in for a growing business – it allows us to deal with it better!
We then break invoices into business related expenses – eg, rent, wages, phone, advert marketing, etc….to pay 1st, suppliers 2nd. And people that keep bothering me 3rd!!!
This is a very light hearted January tip for you to use. Over and out from my beachside chair!
Follow the 31 day Cash Flow Challenge here and on Facebook.